i was so asleep before it even started. it is tuesday, april 9th, 2013. "squawk box" begins right now. good morning, everybody. i'm becky quick along with joe kernen. andrew ross sorkin is on vacation this week. kech ware enjoyed the moment last night, helping teammates cut down the net in atlanta. louisville's coach is now the first in college history to win two championships with different teams. this was news to me this morning. >> yeah. i think he's making about $5 million a year. but he's not the highest paid

coach in kentucky, either. the weirdest thing, to me, about this whole thing is that for the second year in a row -- you know, it's wide open. to me, it's about the only team, it's a 68-team field, they picked louisville. last year i picked ohio state. this year i didn't pick louisville, i dp. >> it can't happen two times in a row, can it? >> i think it could. but what's weird is in any other sport you can look at the patriots might be favored in baseball, but five guys are -- or it's more than that because the bench has been such a big deal this year. but to really be able to pick,

and especially basketball where you get the wrong bounce and serendipity plays such an important role in these things. but to bick the best team, it's so amazing to me. we're going to talk about jc pen thee. the mantra of the stockbroker is you may know nothing, but you're never in doubt so you're always saying things. and it becomes that's all you do. but you know those little pins -- >> from christmastime. >> but the way he'll talk about something, that it's just -- he'll just tell you like it's a fact. and here we are, they lost 4.3 billion wrb so this guy was not -- in the end, ackman turned on them, too. ron johnson. >> has he turned on the ron

congress dollar yesterday? he had 140 xharcharts that show this was going to happen. >> if you're going to though these things, you have to go all in. and salesmen, people that seem to succeed in life. but you don't have to be smart to just stig to something. >> although this got down to the wire. ron johnson is out at jcpenney's strategy. >> shares of the retailer jumping nearly 11% in after hours trading when cnbc' scott wapner first broke the news, but

then the stock dropped after jcpenney announced his predecess predecessor, mike ullman ras coming back to take over. we'll have more from dana tellsy in just a moment. >> but that's what you needed, a big guy to come in and turn it around. jp penny fell so far, and you bring the savior in and he doesn't work and then you bring the guy back in. >> but this is essentially the guy there ackman brought back in, too. >> under ron johnson, all the other department stores, macy's especially ksh. >> plus he turned it around once. jcpenney came back and then it lost its way again. i don't know. i don't know if this is -- >> i wonder if you can get these old shoppers in.

i wonder if by bringing mike ullman back you can win back -- >> i remember right at the beginning, how many times did we ask ackman, how he -- >> oh, he was super at apple. he's quite a salesman to get people to buy those ipads and iphones. >> ron johnson had worked at target before, which was seen as a flashy retailer. >> you could sell those apple products outs of your car. so he designs this sleek -- you know, you go to the mall, it's cool in there and people are all dressed the sa im. >> that is the one store kb no matter which store i go to, it's crowded. >> all these young people in there who know their stuff. what did that have to do with,

you know, picking, like, clothing for -- >> they have sweaters and -- for tweens and teens. >> the wigger problem is they didn't have the inventory. they started the marketing before they had the stores ready to go. this is a four-year plan, but the stock market didn't have that much patience. we knew this for a long time. if your same-store steals are down 0%, that's an abysmal record. >> why don't we talk to dana telsey from telsey advisory group. dana, it's probably not a huge surprise to see ron johnson to go opinion is it a surprised to see mike ullman back in? that is a surprise. mike coming back,way does brick is he brings familiarity. even in the comments made in the prerelease, he's there to prepare the next generation of

leaders. let's see what he brings in and what the team will be. >> is the criticism fair that mike ullman didn't move things around enough? he was there for seven years and he certainly brought some of the discounts there. he reacted to the environment that he was working in. and he's a successful retail executive. now it's a different environment. it's not the same jcpenney when he left. did he cause what happened? i don't think he caused what happened. i think he worked with the environment. but it always can be better and let's see what they're going to do now. >> the big complaint was all of these discounts. that was something that the retailer was getting crushed by. these discounts and the shoppers who wouldn't come in unless you had a massive discount. can you rid yourself of those things as a retailer once you start taking them in? >> i think it's hard. you have to have the discounts, but then you have to have full price, too. you have to give the consumer the product they're willing to pay full price for, and that's branding the store.

how are you going to balance private label with brands and manage the margins throughout it? you need to bring that poor jcpenney customer back. >> can you do that? >> i think you can. i think overall, you have macy, you have tjx, you have a lot of retailers who went after their share. you're not going to get back all the sales you lost, but you can make improvements from what you had. >> dana, one of the huge things were these new stores within a store coming in from j cl penny and the results were pretty good in the areas where they had rolled ott those stores. the traffic has dropped off, steals have dropped off. can they continue doing these at a slower pace? what do you do at this point? you've started rolling out a new strategy. >> i think overall, you have to take a stand and see what's working, what's not working. and you have to get an event in there. you have to get multiple events in there in order to say here is wa we're going to offer you, mr. consumer and mrs. consumer in addition to say the jcpenney that you knew and is familiar

with is back. you have to involve the customer to get their foot steps back in there. >> that was one thing that i think ron johnson did a pretty good job. but when the shoppers showed up at the stores, it wasn't the message that they had been promised. it wasn't delivered. i mean, that takes money, that takes cash, that takes time and i don't know that jcpenney has any of those. >> i don't think it has as much of that, but overall, you can reach out. there's alternative ways to reach out, there's internet, there's e-mails and there's word-of-mouth. that's what i think they have to do, visit jcpenney that the competitor is in love with. >> so you would recommend people to keep an eye on this, buy this stock? >> i think you have to keep an eye on it. you have companies like macy's who is taking share. it's going to be to their benefit. we have to see what are they going to do? what is their game plan?

companies like kohl's haven't been able to benefit while jcpenney has been as weak. it's not as easy to gain shares. >> no one wanted this job, i don't think, dana. do you know who else they called? did they call you? i'm surprised they didn't offer it to you. do you have any idea who else was in the -- >> he's 66 years old, mike ullman. he's the only guy willing to come back. there's so many problems. i'm sure they approached other people that said, whoa, i'm not going if there. do you have any idea, did you hear anything, who else they wanted? >> there's a lot of different names that are being talked about out there. you had ken hicks, vanessa costanza, then you have people like brendan hoffman from bonton who has been successful as turning around businesses. but it's a huge undertaking. >> no. he answered and said he's not here. no, no, no. obviously it's very difficult to fill this. .it's a ceo job where you're going to make a lot of money, but it's daunting.

>> this reminds me of billy martin coming back to baseball. very bizarre. >> it's the story to watch in 2012 and it continues to be the story in 2013. >> i like tag. i like that name. >> dana, dow like macy's shares? that's one company that has been able to steal a lot of market shares. i do. i do like macy's. our conference is kick off today and we'll be speaking with macy's at 8:10 this morning. it will be interesting to hear what they have to say. overall, there's strategies in place. they've done very good work. they've executed well. you have bloomingdales who did well, too. you have the my macy's, the localization, they've basically taken it step by step and it's worked. >> terry. >> dana, thank you.

>> thank you. >> we'll have more on the high profile departure coming up at 6:30 eastern time. and another stock to watch today, alcoa, the largest aluminum producing company and the country reported better than expected first quarter earnings because of strength in this raw materials segment. but the sales were below expectations and the company also didn't give a real strong outlook. it was uncertain, dragged down the company shares after hours. you know, you go back years and there hasn't been a whole lot going on in the shares of alcoa. for a while, it's been single digits. ceo clause clinefield was on closing bell yesterday. we've been focusing on building out our value at businesses. you can see that now in this quarter 72% of all profits come from all value added businesses. number two, you see a remarkable performance from our upstream

businesses, defying all the elements like lower metal prices. very good. and number three, a very good performance on the cash side. those are the things i see in this quarter and i'm very happy about it. >> really just the last couple of years, it's been below 10. then it was up at 18. there's been a long decline. price ves weighed on some of the company's business units. as for the broader markets, stocks end near the session highs. it was the third lightest volume day so far in 2013. the s&p is now alternatived between gains and losses for a record 14 consecutive sessions. >> i see that old adage from barons, markets go up, markets do down. >> we're above where we were prior to the jobs number. create, rise? >> the market wants to go higher and you do have the heads i win,

tails you also -- >> tails you lose. >> yeah. however you say it. because of the fed. and, you know, anything that -- last week we were talking tapering by the summer and now that's -- >> it's gone. >> we'll see what bullard says. >> i'd be shocked if that's the case after all the number that's we've seen. let's take a look at u.s. equity futures at this hour. give us an indication of where things stand today. s&p futures up by 3 1/2 points. in europe right now, the trading is very similar. the cac in france is up by about 20 points. same moves for the ftse and for the dax and in asia, overnight, you did see the nikkei actually ending flat. but this was after some big gains the day before. it was up by better than 2.5%. oil prices r up a little higher up 93 cents to $93.58.

now the 10-year treasury is 1.754%. the dollar is weaker against the yen, the euro and the pound. right now, the euro is at 1.3047. gold prices are up about 80 cents to $1,573.30. in on her news, fed chairman ben bernanke says the periodic stress tests have made the financial system more reslant. >> the banking system is much stronger sense the implementation of the test four years ago. the use of supervisory stress tests, a practice now codified in statute, has helped to foster these gains. method logically, stress tests are forward looking ask focus on likely plausible risks as oppose to, quote, normal risks. >> and the fed chairman goes on to see the positive risks are

did she with groekt. at 8:00 eastern, another first which we just alluded to first on cnbc interview with a top policymaker, steve liesman will sit down with jim bullard. don't miss that conversation at 8:00 right here on squawk. in global market news, japan's economic minister says that that country in the united states are in the final stage about consultations about japan joining trans-pacific trade talks. he says a gap between has been narrowing recently. japan said it wants to join that partnership. it's now waiting for a formal decision by the 11 current members. time for the global markets report, ross westgate is standing by if london. and do you guys get "the wall street journal"? did you see this editorialal on the iron lady is pretty fascinating.

i watched some youtube stuff, too, yesterday, ross. she was -- she was a kick. i'm telling you. when she was in her prime from '79 to 1980, she slapped those men around and they're such loud mouths in the parliament over there. >> i saw some of that, too. >> oh, my god. she would say, you know, one guy said i disdain every policy that you've put in. and she said back to him, you know, the eastern europeans disdain every socialist party that was put in place there, too. the guy even breaks up. we don't have anyone like her any more, any free market champions. we're going to miss her. i don't know how you feel. how old were you -- >> no, i'm a thatcher -- i'm part of the thatcher generation, joe. and, you know, i grew up with her as prime minister.

obviously, i grew up before she became prime minister, as well. in the '70s, there was a period when we had a three-day week. i remember doing my homework with candlelight because the lights of italy go out at 7:00 because they were saving power. she came in, she inherited an economy that was pretty much on its knees throughout the winter of discontent. she caused a lot of discourse because she introduce z which meant some ft o states effect live i collapsed. 6/a lot of people said what we did was absolutely necessary. they in2ke8 bdelibly left her mt just on british politics, but global politics, as well. not even churchill had an ism named after her. there is something called thatcher-ism which are the things that she believed in. it was the roll out of privatization, wider home ownership, cutting taxes and the

idea that maybe you should be responsible for yourself first and only at that point should the state step in. >> i saw her address a question about whether there should be a common currency and a european central bank. she went off on why it wouldn't work. i hear this question today, again and is again and again, that they said the income disparity widened under her 11 years, but everybody is up here. but you'd have rather have dayed down here if you can keep the pemty less wemty. as long as the austerity stayed lower, it would be okay if the guy got poorer. you couldn't take anything. unfortunately we're having the same argument today all over again, ross. >> yeah. and it was interesting what she said about europe. she came out with this one phrase and said we haven't rolled back the frontiers of the state here in the uk only to see

it reimposed at a european level from a european super state. and i think, you know, today clearly that -- you know, in trying to deal with the eurozone conference, that's what effectively people are advocating as a solution. >> yeah. i watched her. i don't know. my manliness was stirred watching her. she just -- really. because she was young and she was so vibrant. even the hair-do. it was like, wow, she's hot. >> she said something along the lines that if you want something said, ask a man. if you want something done, ask a woman. >> yeah. yeah. it was all men in the place. all men. they were firing questions at her. >> never bowed down. >> no. and she enjoyed answering. she had humor. when people pass, that's when you kind of look back and you say, why wasn't i -- i remember thinking that with johnny cash. >> why weren't you a bigger fan st. paul. >> yeah. why wasn't i a bigger fan at the

time. >> it is worth remembering. all the -- you know, the one group of people that would always applaud her, the entrepreneurs in this country. there's a whole group of entrepreneurs that said if it wasn't for margaret thatcher, we would have stayed in america or done something else. the wealth creators. that's the group most inspired by her. let's show you where we are. talking about creation, stock markets, we are weighted to the upside, six to four on the dow jones stoxx 600. in erms on of price action, the ftse 100 best levels of the day was up about 0.3%. xetra dax up 0.75%, as well. second sectorwide, a number of different things. we're following things from al

doe ya, the aluminum brand. as a result, basic resources are the best performing sector today, up 2.3%. banks aren't doing too badly. defensive end, food and beverages down 0.6%, as well. that's the picture we've got here as we me ander through and is we watch what's going on with mr. lew throughout europe. i just wanted to point out, dollar/yen, yen today against the dollar hit ago 47-month low. currently at 98.86. we got up to around 99.60. the yen, 1100. the bank of japan tries out this extraordinarily large experiment. back to you guys. >> thank you. i was trying to figure out where the yen was today because it slipped by me before i could see it on the boards. thank you very much. it's great talking to you and we will see you soon. when we come back, we'll talk about why a major auditing firm is firing a top partner. plus, earnings, corporate news, economic numbers, we'll get you

ready for the trading day ahead. and then in the next hour, a squawk icon and rebel joins us in studio. sir richard branson. how do you think he'll arrive? by a plane, a manned space vehicle? we'll find out at 7:30 eastern time. at a hertz expressrent kiosk, you can rent a car without a reservation... and without a line. now that's a fast car. it's just another way you'll be traveling at the speed of hertz. but at xerox we've embraced a new role. working behind the scenes to provide companies with services... like helping hr departments manage benefits and pensions for over 11 million employees. reducing document costs by up to 30%... and processing $421 billion dollars in accounts payables each year. helping thousands of companies simplify how work gets done. how's that for an encore? with xerox, you're ready for real business.

welcome back, everybody.

kpmg says it has fired a senior parter in its office in an insider trading episode. it involved several west coast companies. the firm did not name the part fer, but kpmg as a result has resigned as the auditor for two contracts. let's get to markets. joining us now, lynn blum, managing partner at westwood capital and is kevin ferry, chief market strategist at cronus futures management. >> good morning. >> cyprus was a good skoouts excuse glenn. lovenia might be the next thing to worry about. but then you've got that abysmal jobs numbers and i've been reading more and more about what's causing the participation rate and disability, where it is right now, and, really, the jobs

picture is just wore itchic. and it didn't help on friday. i would have thought that would have given the market, if it wanted an sclus to go down, that would have been it and we're above where we closed on thursday night now. >> hope spring ee alternative. only 88,000 jobs got added to the economy. and you really need almost twice ta number just to say with demographics and economics. >> did you see the net number since the end of the -- since 2008? >> no. >> 300,000 net total. >> for three months. >> 300,000 since 2009, since the end of the recession net because of we've dropped down so many people have left the workforce, we've -- and we just basically recently went positive on actually adding jobs. now you say hope springs eternal. so is it justified or not

justified. >> the increase in ral i had t in stock market? >> yes. >> it's caused a lot by what bernanke is doing. there are no alternatives, really, because the yields are so low. but we have a very slow-growing economy, run? and people are just leave the workforce or becoming discour e discourages. net on net, no people have gone on disability than gotten a job since that period. do you know all this stuff, kevin ferry? i hope you're showing up early and leaving late. we don't need any more workforce disruptions. it's tough. if you've got a job, you keep it. if you lose it and you go on disability, you can also get unemployment insurance at the same time. it's much better than getting a job at that point. you know what else you can do? you can go on medicare instead of medicaid and you can get that, as well, early and states

don't want you -- states immediately want you to go on the federal disability program because you go on -- >> among the 55 to 64 age group is something like 10%. that was the number in the "wall street journal." >> in the private sector, 20% come back into the workforce that go on disability. when you're a public disability, no one ever -- it's like the hotel california, you never check out. wa does this all mean, kevin? >> okay. that's way above my pay grade. >> the stuff you send me is much more complicated than this. >> right. >> and i wouldn't be complain background your pay grade. are you happy that your employers are watching. >> that's right. so here is what i say. first the number, okay? the number is going to be revised up. so when you miss on the down side, you have two upward revisions, that means the number is not clear yet. so it wasn't a great number. it's not accurate, either. it's going to be revised.

the thing that we're watching, obviously, is the big outside reversal on the s&p. that was on a weekly basis. so i would say be careful of a false hope of what we saw yesterday, both with bond market coming off a bit and the stock market rerallying. because that's what traders want to see if that reversal pattern from last week, that outside reversal down weak is going to have any legs. it starts today. and so today's session is the important one. and any weakness in the stock market today, i think you have to really be careful about that it doesn't start to snowball. >> so we're not out of the woods yesterday, but we're up 23 so far this morning. >> but you know, the other thing is, 8 million people are underemployed. when you look at u6 versus 63, there are so many people who want to work full time, but can only find part-time employment. you add that up with people who are pretty much what i call terminally employed, the

government likes to call them discouraged, but the 7.6 number is deceptive. you add in long-term unemployed, you add in people who are just part-time, it's a real problem. i think it's up at 14%. >> but it all means the fed stays active. >> the fed has to stay active. >> i think that's what's causing everything. it's definitely responsible for what's happening in the bond market. the bond market is telling us bernanke is going to keep being accommodative, inflation is no threat at all. and the stock market is really telling us that bernanke is going to keep active because, you know, there's no alternative in bonds, although you could say that there's less risk in bonds and maybe as you go down the investment grade perspective, pick up a little yield and that may be at play. >> all right. i guess we've got to go, kevin. do you want to bring up the red? that kicked st. louis's -- last

night? >> no. i was going to say, if you noticed, when asset prices are going up, stock prices go up. but when the asset prices start to come down, there is an immediate attachment that's going to be reflective in the economic news. so that elasticity is wa quantitative easing is. and so, you know, we have to see how that plays out over time. >> all right. >> i don't know if japan is -- >> thank you, kevin ferry. thank you. did you look at the cover of the daily news? did you see the cookie monster? oh, he's a cookie monster impersonator. he's shaking down the kid for some money. it's a bollywood actress mother slapped the cookie monster. >> way to go, lady. i have seen some of these characters. elmo was in times square when you walked through. there was a bunch of elmos. they would say, do you want the

take your picture? you would say sure. and then they would say pay up and they would chase you down if you didn't pay up. >> the kid was 2 that he shoved. coming up, we have another corporate shakedown. we'll be talking more about what happened at jcpenney. we'll talk to jeff sonnenfeld about why the retailer is turning to its old boss for help. first, as we head to a break, let's take a look at yesterday's winners and losers. ♪ i have low testosterone. there, i said it.

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♪ well, if you weren't awake already, now you are. wake up, everybody. a changing of the guard at embattled retailer jcpenney. joining us right now with that story is cnbc contributor jeff sonnenfeld. jeff, we probably weren't all that surprised by the idea that ron johnson was going to be out on this. but mike ullman coming back in, is that the right move, do you think? >> it's a spectacular move. i think that probably caught a lot of people by surprise. we've seen people come back from the past like this, but -- and

do a fantastic job, both as stabilizers and builders. mike is a retailer's retailer. he is a wizard of wisdom on consumer behavior. having transformed four marketing powerhouses in the past and he left on a high. and most of his reign was quite successful. it seemed like every retailer and every bank and everybody else in this economy took a little bit of a hit in the 2008-2009. but fortune had him as the third best retailer of the country. >> he's got experience from duty-free store peps highways experience from federated. he has been around a long time and knows his tough. but yesterday's market wasn't was not all that great. the stock was up about 11% when they heard ron johnson was out, but then dropped by half once they explained mike ullman was back in.

>> that's a bucket of reality. it's tough coming in. you can go home again, but a lot of people don't realize is that many people are always in any business looking for the new thing coming from the outside. and mike's perform was mischaracterized intentionally by one of his recent predecessors and bill ackman, frankly, got it wrong. that was the best black friday in their history. he was on a roll when they left. >> wa does he do now, though? this retailer has badly stumbled. this plan that johnson came in that ackman supported to go around and change all the stores within the stores, they got started on that, but they are only about a year into a four-year plan. the cash has been horrific at this point. wa does he come back and do? you lost so many customers in the last year. >> i'm so bewildered by this store within a store concept.

john wannamaker, bloomingdales did it 20 years ago, 35 years ago, and mike has had hs own store within a store. use brought in liz claiborne and levi's. it doesn't mean he has to in any rate destroy some of the things that that have been done. >> but does he try and bring back the old mers. that's mess. >> just like steve jobs and howard schultz were able to bring back their clients, he can do it, too. mike has always known the value oriented notion of these customers and he can bring them back. this is a chain that has a long

history. sam walton got his start at jcpenney. there's a lot of resillal good will to go for it. i'm pretty sure mike would have found a way of not having to get rid of. maybe that's good for him coming back. he's more leveraged to something working out. i wonder if he got it back to where it was when they still thought it needed a turn around, that would be a huge success. but what -- when you lose 28% in the same-store sales number, you would need to go up 40%? i haven't done the math, but what would be considered a success? if he got it anywhere close to writ was when johnson took other, it would be an incredible turn around. that's going to be hard. >> it will be. you have low benchmarks, it is probably comforting that somebody doesn't have to worry about matching soaring market

expectations. last week in office he was up 10%, 15% on same-store sales. he's been able to bring it up before. i think that it's a pretty encouraging future for jcpenney under mike, but he's not going to staere 20 years, 10 years. it will probably be a couple of years. he doesn't need the job. he's in there because he loves the enterprise. >> appreciate it. i said 14. it's right off its multi year low. >> joe, it really didn't cost them that much with the last guy. johnson lost money on this. people talk about his salary, but with the options he had, he put 50 million and lost half of it. >> all right. jeff sonnenfeld, thank you. i would hope, becky, that all stores would be duty free, you know? >> it's a good start to try and get customers back in. >> would you shop in a store

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welcome back. india's largest and moved successful tech accelerator has kicked off a nine-week program with 20 start-ups designed to

foster innovation. joining us on set is the founder of the global super angels farm, rajay shasani. and one of their disrupters, sashien gupta. the founder of technology talent forcing website, hacker earth. what is this? explain it to someone who needs lots explained to them. >> it's two big emerging markets, china and india. you think about how they're going to disrupt that. china has already 625 million people, india has 125. this is going to change. we will bring 500 million people. it will become one of the largest markets with the

distinction of the largest market in the world. that creates potential for hiej disruption. when i think about this kind of disrupti disruption, mostly it's the new players who get it. that's why i got into the business of helping young start-ups in india to leverage this opportunity. and in a mobile first economy in the making right now. every year they're going to add 50 to 100 million new internet users, primarily to mobile. and perhaps only through mobile. and that is a huge disruption. >> mobile is pretty tricky, though. you have to figure out how to operate on that, how to get ads across, do you guys have ideas how to reach out to those people and make money while you're doing it? >> absolutely. i'll take that answer. so if you think of the characters in the indian market, in the last ten years, we added a billion new people on mobile phones. and we only have 40 million people on landlines, right?

that's the disruption in itself. most of our companies have less than $5. and stim make same amount of money. so they're the unit economics with lesser amount of revenue per customer. per the confirmation now is going to be how many of those billion people are going to go to smartphones and what is the play like? there are two forces at play right now. one is the global retail wind of smartphone prices now coming down to $50 with operating systems like android, so on and so forth. and the second driver of the force is books that have been put in. indians are entrepreneurial by nature. it's an exciting world. the business models have not exactly figured out a way to support themselves on the web. the advertising models are still

evolving. but i think we know how to do it around so big. that's a confirmation to the world. >> and you're going to be the guy that builds this, right? you work at google. you're like a computer genius, right? >> yeah. >> and you already have some things launched. >> yeah. >> as i recall you worked on azer cloud computing which is my own personal -- no. i have no idea. >> i worked at microsoft and i worked on it then. a lot of people talk about cloud but they don't understand what cloud is. to put it simply in layman's terms, having a lot of resources and streamlining it in such a way that you can provide it to any user according to their demands. it's all about effective cost and you pay for that.

we can start $10 a month up to $1,000 per month or $2,000 per month. >> what have you launched? a portal that does this? who wrote the code? you didn't write the code. >> we wrote the code. >> seriously? >> i'm fifinding talent is diff day by day. we have a much larger pool of talent. how do you know this is the right fit for me? the problem is being compounded by this becoming mainstream. it does exactly that. it identifies your skill sets automatically and matches it with companies who want to hire

you. geographies are no longer a value today. companies are hiding in india and u.s. too. how do you get access to that? you don't really need to go to find the smartest people. you will find them in their homes. 15-year-old kids are making billion dollar companies. >> we don't have a lot of time, but we appreciate it. good luck. keep us informed on how this goes. >> thank you very much. >> i want to invest. >> part of this here. >> thank you very much for coming in today. we appreciate it. in the next hour, we have sir richard branson. we'll be talking business and investing. nothing is beyond his reach or ours today. stick around. squawk will be right back.

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>> changes at the top for jc penney. ron johnson ousted after 17 months. was it the right move? how is bill act man feeling about the departure of the man he picked for the job? >> david versus goliath. virgin taking on nighted in a cross-country airfare battle. we speak to sir richard branson and david cush about the future of air travel. small business is feeling about the state of the economy as the second hour of "squawk box" begins right now.

good morning, everybody. welcome back to "squawk box" on cnbc. i'm becky quick along with joe kernen. futures are indicated higher once again. this morning we have been watching. looks like dow is up 17.5 points. s&p by just over 3. a lot of back and forth in the markets. yesterday they ended higher. this is 14 sessions in a row it fluctuated between an up, down, up, down. this is the longest time we have ever seen tphrubg saeugz situations like that. ron johnson is out after 17 months on the job. former ceo returns to that post. the man who broke the story, scott wapner. and courtney reagan to talk about what this all means.

alcoa, 11 cents a share, 3 cents better than the street was expecting. revenue came in short as it continues to deal with low aluminum price. louisville is college basketball's champion. it beat michigan in the ncaa championship game coming back from a 12-point first half deficit. roach rich petino, this is his second national title. he won with kentucky in 1996. kevin ware helped cut down that net. >> that was a shot of the confetti cannon going off. >> what is it about kentucky?

all those mid-western states. great basketball. and you have the bruins, longest dynasty of all time. the markets at this hour. 93.58 on oil this morning. the 10-year is back to 175 or so after going back below 1.7 on those numbers on friday. and then gold, i don't know. i'm writing it off. someone is going to drop a nuclear bomb and can't get a bubble. you're going to try to bribe your way across the border to get away from the zombie apocalyptic across the country.

here's my coupon, my etf certificate. they're going to go, sorry, that's paper. is that why? >> i don't know. that's what rick santelli says. and that's the best answer i have heard yet. got a better one? >> do you see this stuff? they want to come on and debate. rubini is afraid to do it supposedly. >> they had quite the fight last night. >> i didn't see this. >> should we host this. >> yes. bring it on. >> they're fighting about gold? >> and they want to do it on "squawk". >> good. >> get ready to rumble. >> okay. wait a second. i have to follow all of this. let's get back to our story of the morning. ron johnson is out as ceo of jc penney. scott wapner broke the story

yesterday. and courtney regan. let's start with courtney and the issue of ron johnson's pay package. >> you know, becky, it was not only a short tenure for johnson but it was costly as well. some analysts are concerned it is not over yet. shares down 51%. revenues down $3.3 billion. retailer lost money in each of the last four quarters. it's not just the shareholders that lost money. it cost him too. with the health of executive compensation data firm equilar, during his time at jc penney he made 2.1 million in cash. the total current value as of monday close of the jc penney shares that johnson owns outright is $14.2 million.

his total take home pay for 2011 was $16 million. strike price, 29.92 with an expiration in mid 20.17. those are way out of the money khfplt means if there's no value realized it actually cost ron johnson, $33.3 million to serve as jc penney ceo. shares also lost 17%. revenues essentially flat. it is causing analysts to have some near term concerns about the risks involved. wayne hood specifically noting the move itself is likely to create uncertainty among jc penney's suppliers. many believe olman will return to that high/low pricing strategy with the promotions. wall street isn't necessarily surprised with the nature of

this move itself. but the timing is interesting. a lot of analysts are wondering if the current quarter is much, much worse than expected. back to you guys. >> let's get to scott and henry blodgett, editor-in-chief of business insider. alec young is global equities strategist at s&p capital iq. ackman, he won't come on with you anymore. where did he buy? 25 to 30 or something? >> hang on. >> i don't remember where he bought it. >> it was in the high -- >> this is a tough morning for bill. >> did you hear what i said, scott? i said if you're a stockbroker, the first thing you learn you may know nothing but you're never in doubt. when ackman has something he

wants to tell you, it's like god preaching to moses. and i thought there was no way that this guy was not the messiah for jc penney the way he talks about it. obviously he wasn't. he's so sure of these things. >> on paper ron johnson looked like he was -- >> because he could sell apple products. >> i have to say i even got suck erred in by marketing. >> duty fill story. >> ron johnson may be the visionary best marketer on earth. there's a difference between a visionary, marketer. he appears not to be ceo material for this job. am i surprised this happened right now? not really. it's tricky. reporting the last many, many weeks led me to think this was going to happen sooner or later.

it wasn't a matter of if, more when. the optics of him not having a home in dallas. can you be all in if you're not really all there? losing the board ultimately. i thought the writing was clearly on the wall when ackman was at a conference in boston and he shredded. >> reporter: what about allman, scott? doesn't he live in colorado still? is there a question about him moving to texas? wasn't exactly the answer of all of jc penney's woes either. >> no. but i don't believe anybody believe he's here for the long haul. he's a stabilizing voice, a guy who knows the business. employees can rally around this guy a bit. i'm sure nobody at the high levels of jc penney, think mike

is back in this game to play for the long term. i'm sure that that is just not the case. >> that suggests jc penney is in absolute crisis, though. >> it lost a billion dollars last year. >> ackman took it out. completely failed strategy. i'm bringing in a new guy. now an old guy to just stabilize and slow the sinking of the ship until you can bring on a new guy. >> back to where he was considered a failure in the first place. >> just imagine what's going on at corporate headquarters. >> they have to go up 50. they have been down falling so steadily. >> the last quarter they were down 30. i think after being down 20. >> this is probably the worst in retail history. >> but they did that back to

back. >> biggest misstep in this whole thing i think ultimately would be -- the strategy speaks to a level of arrogance, i think it's fair to say. look, apple survives with a certain level of mystique and arrogance in its own right. we tell you what phones we're going make that you want. we know what you want. that doesn't work in a painful. >> we're going to tell you you're not going to like sales and you're going to like it. shares close to $29 the day before ackman's position. the stock had risen 42.37 back in february. that was the high watermark. but his stake, current stake would have been worth 1.1 billion at the point it revealed its first position. after hours, 567. >> quick question on that. how concentrated are their

portfolios? >> ackman's is much more concentrated than most. he's not one of these guys with 30 or 40 stocks. >> a miss or a win is a big deal. >> no. it's a big deal. >> herbalife is still unsettled and out there as well. it's to be determined how all of that is going to play out. it's important to note on a day where, look, ron johnson is going to be criticized. certainly he failed at what he tried to do. the pricing strategy was a disaster. but in a week where we're going to ceo pay and recognizing the fact that larry ellison made a lot of money last year, he put a lot of skin >> matt: game which is something you don't see often. on a day you know ron johnson

will be facing a lot of criticism. >> is he even stupider? >> wasn't a very good move, a very good investment. >> obviously not now. >> you have to admire him for putting his money where his mouth is. he lost all the money he put in. would have been better just to take the salary. now he really looks. he's down how much on the whole experience. >> anybody thought this was going to be a failure from ron johnson, bill ackman to the employees who finally thought the second coming was coming in the door because of the pedigree of apple. >> just the aura. it translated to getting this guy the job. as i said designing stores that are sort of white. there's not a lot of things

there. they're austere. thinking you can sell clothes because you can -- >> he said that to ackman right away. he had those pens. >> last i check steve jobs was running apple, not ron johnson. >> are you trying to get this guy on your show or something? >> what? >> are you trying to get this guy on your show or something? >> ron johnson. >> you're being so complimentary and nice. >> that wasn't so complimentary. and i think if you read the isaacson book, you have a better chance. a lot of people had their hands in the pot. i think at the end of the day maybe some of that is going to be flushed out more. >> he had retail experience at carter before apple. >> absolutely. he had enough going on to get this job.

>> may ultimately be too much change taofpt, too much seat of the pants. not enough testing it. >> that's what ackman said on friday. you can't just roll out a strategy with no testing. >> and i'm sure he said it like it was completely obvious. >> when it was happening, oh, yeah -- do you remember. >> yeah. >> the 10% had strong -- >> no arguments. >> he won't come on either if you're mean. >> if carl had a position in jc penney, how good would that be? he's done things for less. hearing you might now might be

accepting sleeping. >> he wakes up late. >> scott, thank you very much. courtney, thank you. our tkpweflt hosts are staying with us the the rest of the program. >> up next, time to talk tkaoefplts thl partners on the change at the top. jc penney, his firm's most recent agriculture seugz. an interview you can't afford to miss. we had been looking at green arrows. s&p up 3.5. "squawk" will be right back. everyone's retirement dream is different; how we get there is not. we're americans. we work. we plan. ameriprise advisors can help you like they've helped millions of others. to help you retire your way, with confidence. ♪ that's what ameriprise financial does. that's what they can do with you.

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thl buying for an undisclosed sum. joining us newton, massachusetts, co-president. scott, thank you very much for joining us this morning. >> you're very welcome, becky. thank you for having me. >> so we have heard reports about this deal. it could be about $1.1 billion. i know it's undisclosed sum. can you tell us a little bit about what's happening. >> yeah. let me just talk a little bit about the company. this is a deal by three of our

partners who have been working for almost nine months now on a company that fits right in with our strategy of investing in companies that can provide a set of services to other companies more efficiently and more cost-effectively than the companies can provide the services themselves. compucom is the leader in providing on-site support services to i.t. departments of largely very significantly sized companies fortune 50, fortune 100, fortune 500 companies. because of the increasing complexity of what these companies have to deal with, the outside expertise of compucom is highly desired and has had both significant growth and we anticipate futures will begin growth by being able to provide these services for their

companies. >> scott, we were talking with some disruptors about the cloud. is than idea on cloud 2. so other companies don't have to ramp up with as much hardware on site. >> yes. it's a combination of two things. number one, the on-site i.t. requirements of these very large customers and even smaller companies now are getting increasingly complex. even without the cloud being added to the equation. once you add the cloud to the equation, the set of choices can be made to help manage these devices that the employees of these companies have becomes even more complex. and therefore the expertise that you can bring is something that is very helpful to your client companies. so this is a growth area in an overall economy that obviously has been growth challenged. >> i wonder from the private equity perspective, as we watch

the markets tear higher and stocks to continue to score to these levels, does it make it tougher to find place so you can park your money? >> agents a very good point. if you look the last 18 months, as we have had more robust capital markets particularly in the credit market side, you have seen praoeufpt equity being able to realize on investments that have been made the course of the last five, six, seven years, being able to refinance those companies. the one thing we haven't done as much of as people expected is acquire companies. that's pause of the point you just made. with the strong credit markets the expectation of sellers has probably gotten to the point where it's over what many of us as buyers can afford to pay for a company. helps, i think for many of us in the industry the focus has been on trying to create transactions and often that means spending 6,

9, 12 months work to go create an opportunity that you can either have on an exclusive basis or to put together a set of things to give a platform in kwraurs that might have general growth or gdp. >> did private get a bad name because of what happened during the election. did it make things tougher for you or did you ever notice any difference? >> i don't think it affected the nature of our business nor did it affect our relationships with limited partners or companies that we were hoping to partner with. but certainly in terms of the general population i think private equity, the first exposure wasn't necessarily the best exposure. >> the economy is not exactly helping either, is it, scott? >> no. >> 101 million people out of work. what's the real unemployment

rate? it's got to be nine or ten. >> again, well, at least nine or ten. one of the significant head winds that we have to deal with as we look for opportunities to grow companies is the employment picture and the impact that has on overall consumer spending and the expectation that business has for spending. we have so much going for us here in the united states. for over two years we all have been talking about the implication of a very low cost structure and the competitive advantage that gives to u.s. industry and to the united states is a place to locate both manufacturing plants and the service ises that support those manufacturing enterprise. but the head wind is the one you're talking about. most of that has to do with overall global macro policy.

to some extent obviously the governmental policies that we dole with here in this country. >> some of it is self inflicted. i have no doubt. >> yes, it is. >> scott, one of the reasons earnings is so high, is we caught out so much cost. when you buy a company like this, you grow it. do you invest or is it cost cutting? >> the way private equity in general can make money. and we've been focused on this over 30 years is growth. growth leads to improvement in margins. growth leads to higher margins and higher multiples. so the best way to make a company a more profitable investment for limited partners in ourselves is to grow that company. the growing of a company involves doing a lot of work. and we have a large internal

operating team, plus investment professionals focused on how to you reenergy the business processes in the country to make that company a more effective competitor. it's going to take market share and create opportunities to grow through adjacent seus. >> can come down today. don't be a stranger. see you. >> how is small business feeling about the economy? zap technology.

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fed chairman ben bernanke said the stress test helped stabilize the financial system. higher capital system made things stronger. improvements in bank liquidity are still needed. >> bank of japan's easing moves pushing the yen lower.

we came tantalizingly close. 99.65 before pulling back a little. 98.91 is where it stands now. >> and the focus compact was the best-selling model last year. it sold 1.02 million models. >> what would you expect? probably not a huge upbeat report. it showed a drop in confidence. no small business owners. i think now is necessarily a good time to expand the small business optimism index. down 1.3 points in march to 89.5. joining us is independent

business. bill, were we wrong assuming things were getting better three or four weeks ago? were you watching? did you know small business owners weren't feeling that great? >> we talked to a sample of 350,000 members every month. and it looked like we were going to get a little bit better. job numbers were looking a little better. we were hiring a few more people. in a way it was a surprise. we certainly hoped it would get better, but it didn't. 77% think the economy in six months will be the same or worse than it is now. they don't have a very positive outlook. they're not going to hire or buy new inventory. >> small business owners probably are in a better position to know whether this is

a 7.6% labor market. they probably have a good idea seeing that. they know we're getting here in a crazy way with the participation rate. >> right. they know the unemployment rate is still high. they don't have any real trouble finding people when the labor market is tight. they feel they're the front line between the manufacturing sector and consumer. they know first when things get soft and better. when the car dealer sells a car and he said i need more cars, the message goes up the line. right now it's not going up the

line. >> what are they complaining about right now? it's not always the government or regulation. i guess demand. what is it? what's the top three thing? >> they pick whichever is the worse. 21% said useless regulation and red tape. and 17% said weak sales. so that's come down from 33% two years ago. but still pretty high for a period you would want to think of as growth and expansion period. >> i don't see why you have higher numbers. one in five doesn't seem that definitive. >> they can only pick one. >> woupbt of ten. >> yeah. >> the winner was higher taxes.

>> yeah. we did a larger study. we give 75 things to rank worst to least worst. rising health care costs is number one. number two, uncertainty about the economy. three, energy. four, uncertainty about government policies, five, regulations and represent taeud. 6, 7, 8, taxes and changes in the tax code. that's pretty much dominated by government off the top. >> are we ready to go, father? did you pie that at jc penney? where do you find a shirt like that? >> i'm trying to help them out. i thought i would try to step up to the plate. >> fashion forward. >> that's what they were showing for the season. that explains a lot. >> i think it was the season 20

years ago maybe. >> bill, thanks for playing. i know i could get you to play along. the last time you said something good it was like before the financial crisis for these guys. >> absolutely. it was back in '07. even then we saw it slowing down. >> all right. thanks, bill. one of these days and then we'll know. thanks. steve liesman joins with us a preview of today's big interview with st. louis fed president james boler who is wearing the same outfit -- which is weird -- of dunkelburg. i'm kidding. do you have a monitor? >> no. >> he had a tan shirt. i swear to god. you can't make this stuff up. unless you're confessing your

sins to him. >> he's supposed to confess his sins to me. >> what i'm interested today, joe, this is the first time i have had a chance to talk to a fed guy since the unemployment numbers came out. i think there's two issues here. the first is weak numbers. the second is the unemployment rate. it fell for all the wrong reasons. how is the fed going to factor that in? he was the first to signal anybody to the nation as 7% being a cutoff or taper point for quantitative easing. this is a great time to update and get his thinking. >> you're right. especially given what happened.

>> it's already old. it's not even pertinent anymore. >> you mean the tapering thing? >> right. >> it is percolating. >> still? >> we don't know where the center of the board is, right? >> yeah. >> you think the jocks thing is weak and therefore it's done. i think it's of critical importance to the market. we're doing a two step. not only will we trade the end of qe, we will trade ahead of the announcement of the tapering of qe. where everybody stands and understanding how they react to incoming data. >> it's just weird. it seems like things seem to get better. bernanke sticks to his guns. we all say, wow, what is his

problem? these other guys are there to greenhouse and say things. >> he's had a good run of the down side outcomes. >> or causing them. >> thanks, steve. >> sure. >> all right. still to come this morning, we have corporate david versus goliath. virgin air taking on united. david cush and sir richard branson will join us in just a few months.

welcome back, everybody. virgin america is adding a 20th destination. the move sparked an airfare war. joining us is sir richard branson, the founder and chairman of virgin group.

also, david cush, president and ceo of virgin america. guys, thank you very much for coming in. i told you off camera i'm very good you're launching in new york, the airport i fly most frequently fly out of. i tried to fly from anywhere in new york to salt lake city and it's not there yet. when are you going to fly to more places? please. bring it on. >> we will get started with these two routes. we have been in newark a few days now. it's working out great. fares have fall ben by 40% since we have come in the market. we will dip our toe with san francisco and los angeles. >> i did fly virgin america back in february to san francisco. i guess back from san francisco. and i have to say you offer a great product. i don't understand why you can offer that kind of service for less money than what carriers like united and others are doing.

>> i think if you're smaller than the big johns, you just have to be the best. virgin as an airline in the airline industry, virgin atlantic started 30 years ago, created the best airline across the atlantic. we survived. we have done the same in australia. now we're doing the same here in america. and people seek us out. and i think as long as we keep that quality -- the number one airline. >> yesterday. i did notice that. >> who was voted last airline in america? >> united. bottom of the list. >> if you have two planes flying side by side. >> honestly, what do you have? what are the advantages that allow you to do that? lower labor costs? i don't get it. it doesn't add up to me. why charge more and have more people crammed in. i don't get it.

>> one, they have a complex operating structure. they fly to many different places all over the world. they have many different types of aircraft. complexity costs bleed throughout their system. it is maybe 30%, 35% higher. that's part of it. and we got to start from scratch. and to start from the beginning with the service culture and getting happy people people phone used into the doors and making sure they stay that way. >> you don't have some of the legacy costs. >> and having a good leader. it ricochets down through the company. >> does it work economically? americans say we want better service in airlines. we love sreurpbl in. and recent headlines, you lost a boat load of money. >> starting up an airline is not cheap. you have tremendous capital

costs. what we see is after 18 months our mature routes are very profitable. we had a profitable fourth quarter. quite a profitable 2014,000 that we have shred down. >> gordon bethune has come in and said you're only as smart as your dumbest competitors. >> consolidation has taken care of part of that. we don't consider ourselves dumb competitors but think we are aggressive with a good product. when we go in, prices fall. 40% in the newark markets just the few days we have been in. >> if you're talking about dumb competitors, united is behaving like the old carrier airlines of the past. it slashes fares to such an extent that it is going to cost

them $150. now, if they hadn't reacted like that, it would have cost $30 million, just the extra competition on the route. and that's how the big carriers have driven themselves to bankruptcy in the past. >> did you have to larry your fares once they started? >> we would have anyway. we like to be competitive. we matched the fares. it's going to hurt them enormously to their bottom line. >> and i will say the bigger impact is increased capacity. they have flown these routes with eight flights a day for many, many years. up to 14 nights in june. very positive for the consumer. good for fares.

but a little bit dangerous bottom line wise. it's kind of the new competitive rule that we have in the airline business. when you only have three legacy characters as opposed to six, maybe they need to look at them more closely. >> do you think there's too much consolidation? >> it's good for the industry, ultimately good for employees. but there's a different regulatory environment when you have three characters versus when you had six with robust competition. >> what do they need to do now? >> it took us four years to get into newark. only when they went bankrupt we managed to get some slots there.

regulators need to ask questions of these carriers. the questions need to be asked bit regulator. >> seems like you two have a slightly different view of where things are headed. david, you say because you're striving staurdz profitability and you want to maintain profitability after what you saw in the fourth quarter you don't want to grow too quickly on routes. would you open new routes if you could get the chance? >> i'm known as dr. yes. they will say, hang, on richard, we'll make some money first and then we'll do that. i'm sure we'll give you your stock i promise you one day.

but we're going to -- yeah. get good profits under the belt. we'll do construction. >> and i do want to come back to this point, becky. the competition in the industry is eroding. we know that happens with consolidation. we do not have new airlines starting up. there are no more new airlines. >> whose miles can i use? can i use american express? can you get an upgrade? >> no one gets an upgrade without paying for it. you can use american express miles. >> to what? >> book tickets in first class. and you can use any other virgin airline miles, singapore miles.

>> and frequent flyer sort of program where people get to a certain level if they fly all the time. >> a story about thatcher. >> you knew her, didn't you? >> yes. i knew her quite well. we tried to be the fastest boat across the atlantic. she joined us. we sailed around together. >> are you a fan? i was more of a fan than tphout not. >> you were a business person. >> yeah. >> a read a book, f capitalism. >> no, i haven't done that.

>> what was the name of it? she was the iron lady. that's what happens when you get a ghostwriter. you forget your book. >> no, i think she shook it and it will never be the same, in a positive way. she privatized companies. >> kept you out of the union. she almost had a crystal ball into the future. >> she got virgin into heathrow.

>> she reminds me of the queen. >> that's funny. i was thinking the same thing. >> she's definitely -- has a place in history books. she's definitely done great things for our country. >> excellent. >> we talked a lot about the airline industry. you two know difficult industries. one of the stories we've been talking about is jc penney. it has been a very rough road for that story in particular. ceo is out. ron johnson. the old ceo is in. much is that a tougher business than airlines? >> i think the lesson we talk taobg from that is don't destroy our old revenue model before you prove your new revenue model.

that's the box they ended up finding themselves in. our business is largely retail. small. high transaction. but we watched that very closely. there's a lot to learn from everyone. >> do you think the idea was flawed? >> his ideas remind he me of you, very inspiring speaker. yet too much too fast. do you think the idea itself was a great idea? >> it was a great idea. revenue supports your struck shefrplt just make sure the new model works before you destroy the old one. maybe it was a flaw in execution perhaps. >> are you going to mine an asteroid or something? >> yeah. we're part of that company. >> what do you need to do personally? >> i've been talking about it for a number of years. week after next we do our first

hard flight with our space ship company. hopefully break the sound barrier in about two weeks's time. by the end of the year the new space ship should be up and away. this year 1450b a momentous occasion for virgin galactic. >> a couple years from now, anything wilder than this? >> we're building submarines to explore the bottom of the ocean. >> 80% species untouched. >> who knows how many medicines and stuff -- >> it's true. and a lot of ships full of gold and treasure. you never know what we're going to find. >> personally, any balloons or

anything else or are you slowing down? >> i'm going on both of those trips. >> we will jump at some stage. is it possibly going to be you? >> i normally like to say yes. i'll see if i'm allowed to. >> thank you very much for coming in, sir richard. appreciate it. you have been fantastic, david. we wish you luck. >> see you on the salt lake city inaugural one day. >> those tickets, no way. thank you very much. we go from fed policy to jobs and the market. sidewalk will be back after a quick break.

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back to the future. ron johnson is out as jc penney ceo. and they are bringing their former boss back to the helm. >> but are investors sold? >> plus, a live conversation with st. louis fed president james bollard. a news making interview you

can't afford to miss as the final hour of "squawk box" begins right now. welcome back to "squawk box", everybody, on cnbc. andrew is on vacation this week. our guest host henry blogett. editor-in-chi editor-in-chief. yesterday the markets were higher. dow futures up 23 points. s&p up by just over 3.5 points. overseas in asia, japan was flat this time around overnight. nikkei ended flat for the day.

cac is up by half a percent as is the ftse in london. our top story, tracking what's happening at jc penney. >> can he get it back where where he was before he was dismissed. that would be huge. ron johnson ousted. >> for some reason i thought there was a reason he left in the first place because they wanted to do better. he had gotten the company to a point -- >> when jc penney was in huge trouble they needed a rock star. he was a rock star. it was huge. it was like apple announcing

ipad. except he was announcing new sweaters. >> some of that rubbed off. we're back to the future. it's probably not surprising the stock sold off. no one else would do it? no one else would take the job? >> stop the bleeding, get cash flow in. they're saying, hey, the train is off the tracks. they're on the same track again. maybe he can bring it back to where it was. where it was is pretty bad. >> that's what i mean. what's the first thing you would do? stop the plunge. maybe bring back the coupons. it's not sexy but it will bring money back. make the investors and employees happy. there's been layoffs. stocks are down like crazy. down half the value. at the same time, while they're

trying to stabilize, macy's and everyone is full speed ahead. >> a huge challenge are the employees. already people are saying, oh, they don't think he's here for a long time. he will just stabilize things. how do you rally a company around that? you have had huge changes the the last year? undo all the changes? is he going to walk out the door the moment it's done? they are in a crisis right now. >> every point to try to bring back 10 times as hard to lose it. >> outside ceo is saying this is the wrong path. this is old. they fire him. they are saying, hey, go back to how it used to be. if you're working there, that morale is terrible. >> how do you get the customers back in? >> i had the shirt last week.

>> dunkelberg had one. >> did sears ever start market share. >> no. despite ideas and plans and so forth. >> the stock keeps going down. there are 1,100 stores. >> do they own the land for all those stores? >> i don't know. >> craftsman tools. >> there are assets there. if stock goes to the 10 level. >> they don't have a lot of cash to work with. they have had to do an emergency financing. they are mid transition. now you undo all that and go back. they just brought you in.

that stuff. >> steve, thank you. >> out to st. louis where steve liesman is sitting down with bollard. a lot you'll be getting at this morning. >> yeah. becky, thanks very much. there is a lot to get to with jim bollard from the st. louis fed. thanks for joining us. >> thanks for having me. welcome to st. louis. >> the friday jobs report came out weak. what did you make of the report? >> it's not changing my outlook. i'm inclined to look past the report. mixed messages. 170,000 jobs the the last three months. 200,000 jobs the last six months. a first quarter that looks quite a bit stronger than what we expected at the beginning of january. so i think there's been a lot of good news. this is a down number.

but we'll see. there was revisions to january and february. maybe there will be revisions to this number. so i think we want to kind of wait and see. and so i think that's where i am right now. i wouldn't change my forecast based on this. >> do you have a feeling of here we go again. last year we had strong first quarter. and then the weaker second quarter. and other data has been coming in a little bit waerbg. two isms were above 50 but weaker than the prior month. >> i don't think we have enough evidence to say there's any kind of swoon going on. and i don't think this is like the other years. one of the things that's going on is europe is a lot calmer than it was in 2011 or 2010 or 2012. and i don't see europe coming back onto the global financial stage in a big way. cyprus showed that.

i'm expecting that part of the world to remain calm with respect to financial markets. that will help the u.s. through the summer here. >> let's talk about what your forecast is. when does unemployment -- how much growth do you see? >> i'm still projecting unemployment to be down in the near 7% by the end of the year. so far i'm winning on that. i've been saying it will continue to tick down. i do not think people will suddenly come back to a labor market with unemployment in the sevens. the story that all of a sudden people will see a great labor market, i don't see that until you get to much lower levels. i think it will continue to tick down. a lot of this labor force participation is a trend that has been continuing since 2000. so you have to adjust for that trend that's been going on. it's been somewhat worse during the recession.

not all of that is just business cycle. >> you told me in january that 7% was a place you thought it was time to stop quantitative easing. is that still your thinking? >> what did i say? >> you can't run away. we have it on tape. >> i thought you said 7.7. >> no. >> well, surely if we get into the low 70s everyone will say there's substantial improvements in the labor market. there are a lot of other measures of labor market performance. that would be substantially better than where we were in the september time frame last year when we started the qe program. >> let's talk about how you see quantitative easing ending. what is the process? do you see a tapering beginning? >> the chairman came out and

said they were willing to alter the pace of purchases in response to the economy. that's something i've been arguing for for a long time. you could adjust up or down. most likely the economy will improve and we can slowly ration down the pace of pumps. it serves us very well. the notion when a little bit weaker data comes in or stronger data comes in, the fed policy is going to adjust in response to that. that's been a good development. >> it could happen as soon as this summer. >> yeah. again, why talking about dates? why not talk about the state of the economy. to be fair what he said was if my forecast comes in. >> that's true. >> if it continues to improve we will be in good position to make a decision. and i think we have more willingness to make a relatively small adjustment if necessary to

show markets we're adjusting as it comes in. >> is there actual $10 billion of qe either way in response to point of the -- >> i would be willing to move in small increments. to me that's the analog of a 25-basis point move. you're not doing a lot on a particular day. you are signaling direction. you are signaling you are seeing the economy come in. so i would be willing to make smaller moves. the fed so far during the left five years has not been willing to do that with respect to these programs. this is a new development. >> and you have agreed to stick around after the break. >> from st. louis, back to you, becky. and you guys will have a chance to ask a question or two. >> all right. get ready. we're getting ready for it too. steve, thank you. jim, we'll be back in just a moment. we will slip in a quick commercial break. more from st. louis fed

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welcome back, everybody. dow points up 5. watching closely. the markets did end higher. >> back to our "squawk" news maker of the hour, st. louis fed president with jim liesman. 13-5 reds, don't despair. it's early in the season. you're below .500. things could turn around, like the economy. >> they can and they will. it's one game. it's like watching the economic data. >> you're looking beyond that. i would too. 13-5, wow. >> great piece in the journal. i think about you and the fed. and i worry about what you're facing. what i'm talking about is a piece on how many americans have

gone on disability, which is what you said about the trend for the participation force. but some of this almost looks self inflicted. more people have gone on disability than have entered the workforce that have joined the labor force. apparently fed chairman worries about historyesis. it's when things happen in a crisis become permanent, a permanent loss. i wonder how much it pays to stay on disability. it is getting harder and harder to push this rock up the hill given what you're up against. we may never have a decent labor market again. >> well, i have worried about

hysteresis. a gigantic economy has had hysteresis in and that is called europe. unemployment went to high levels. it never came down without structural reforms. if you're going to fix that kind of a problem you don't want to talk to the chairman of the federal reserve. you want to talk to the labor secretary. you need labor market that will address structural problems in labor markets to the extent you have them to prevent this from happening. i am concerned about that. one of the things i've been concerned about is tying too closely to the unemployment rate. and it doesn't behave the way you think it should, in a sick cal fashion but instead just wanders up to high levels, you can have then a poor labor market out but it also pulls monetary policy off and you get

poor monetary policy. i kind of lost this argument -- it is a risk. >> supposedly he is still pushing that rock. he does it forever because it rolls back down. if we never get to 6.5%, you'll be 85 billion a month forever. >> right. a simple thing to say is if you just look at the euro area they never got to 6.5. they never got to 6.5. even in the best times. >> and so disability itself, you can also get -- even the democrats are talking about separating when you can't get unemployment and disability at the same time. you can make 50 grand a year. that's why i feel sorry for the fed thinking it's all on your back. it's an uphill battle against

what's happening in the labor market. >> yeah. i don't know a lot of detail about disability. there has been research about it. a simple thing to say is you do have an aging population that might be a factor. >> sure. >> do you even believe 7.7%? we watched the participation rate continue. >> i don't believe 7.7. i believe it was 7.6. >> do you believe that number? when you think about the participation rate and how things have come about and how many people are discouraged about trying to find jobs? >> okay. there are other measures of unemployment. and i'm happy to look at other measures of unemployment. but don't switch around on me. if you're going with main unemployment rate, stick with that and compare that over time. if you want to go with one of the other ones, go with that over time. what you will see is that the correlations are very high. they all tend to move together. >> why do you think the participation rate is so low?

is that simply baby boomers. >> the participation rate has been on a downward trend since 2000. you have to account for that downward trend and look where it is compared to the trend. if you just look at the picture it is downward since 2000. so that means all the way through the last decade the last 12 years. >> jim, are you surprised and are the rest of the fed surprised at how lousy the the economy has been the last few years? when we went in the financial crisis you had them say, look, it's going to be five years of really crappy moving sideways. yet mr. bernanke comes out, is optimistic a lot of the time. when you're behind closed doors and just talking about it, are you surprised at how little we have been able to do? >>. >> well, i haven't been surprised. i'm the the one that said we

should take it on board and think of that as the benchmark for where we expect to be in the aftermath of a financial crisis. and i think that has been, you know, served me very well. that is about where we have been. 2% growth or a little bit less over the last couple years. i think we have had other factors that have come in. unfortunately europe, instead of coming out of recession, went back, you know, as far as we have in the last year and a half or two years turned around and gone back in recession. so this is a huge economy that's going the wrong way. so that's been the main development on the global macro economic scene. but the hypothesis is exactly the right one for how to think about the u.s. in the aftermath of the financial crisis. and it means potential growth rates should be lower during this time period. that's why inflation has not drifted down to really low levels as you would expect if the trend rate of growth had been at this higher level. >> how long is that likely to

last? >> when do we get out of this period and go back to real growth? >> you do eventually but it takes a long time. five years is probably a good estimate. they look across many countries and time periods. it takes a long time for the lingering effects to go away. >> $85 billion a month in additional security purchases. how much concern do you have for the costs of this, that this ends up really complicating the fed's exit strategy when do they rise to a place you say we shouldn't be doing this anymore. >> we are going deeper and deeper into the woods. that concerns me. when you look at it overall, the size of the fed's balance sheet to gdp is not as high as other central banks. i think we have some room to

maneuver. we are taking on additional risks. >> what are things that would signal that risk to you? >> well, i think the thing about a big balance sheet is it's a big unknown. you're not quite sure what would happen. economy turns around, money supplied floods out. a lot of inflation. something like that could happen. it hasn't happened so far. it might give you a little more confidence. that doesn't mean it can never happen if you had your druthers you can say i would rather just go back to normal policy. so we want to keep in mind being able to get eventually the fed's balance sheet back to a normal size and eventually back to interest rate targeting and eventually back to a more normal monetary policy. >> staoefrbgs it sounded like -- you said as we get lower in the unemployment rate that's when you would expect people to start coming back in the workforce.

maybe that's it too. at least you would feel better about -- i think this is a really crappy feeling, 7.6%. maybe if we saw people coming back a little it would at least feel better, right? it doesn't feel like 7.6 people say. >> so there's a good 7.6 and a bad 7.6. this is a bad 7.6. >> is that wrong? >> i don't know. i feel unemployment is unemployment. i have to go with the number. we have had labor force participation rates at this level. >> but they come back. the truth is about macroeconomics we don't have much of a theory about labor force participation. we take that as an input.

>> they moved because of demographic issues too. i have to ask you a question. >> tell me how important it is this issue of financial literacy. >> incredibly important for the federal reserve system and fed of st. louis. we straoeu to put a lot of effort into it. we don't have a big group, but we're trying to be online and provide curriculum teachers can use all around the country. we have lots of down loads. our numbers are about 250 downloads of online curriculum. >> hold on. you have a curriculum that the the teacher can go to the website and download and use that to teach kids about the

monetary policy? >> absolutely. we have a great deing preparation curriculum. that was our initial piece. it's been popular because you can download it and fit it in to different courses, use pieces of it. that's worked very well as a resource for people to learn about the great depression. what was it? what were the issues. how did monetary policy work? we think that's a good model. it allows us to leverage up and be helpful. we think it is incredibly important. >> thanks for joining us. >> thanks for having me. >> guys, back to you in the studio. >> steve, did you know what hysteresis was? >> i did a whole report on your show about it. >> with us. >> it's about if i got up off this cushion and it didn't pop

back up, that would be hysteresis. >> joe, we had the famous twinkie example on the show. >> i thought it was low t. i thought i had it. i have been using testosterone. that's not it. all right. >> you get on my case for not paying attention. >> i do have a defense. this is one of your reports, right? thanks. >> you had to do that. nicely done. >> thank you. >> president, thanks a lot. it's great. >> he's very frank. i always learn a lot. do you? >> i learned about the data. i went back to 1978 was the last time we saw participation rate of 63.3. historically it was lower but that was probably before women were in the workplace.

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welcome back to "squawk box", everybody. yeah. a new poll finds that the vast majority of working americans are not in their dream job. 70% admit they are in jobs that do not reflect their true career passions. these findings come in conjunction with a new reality season called "the moment." lottery winnings, the moment. this is it.

>> tennis pro would be good. >> you would have to be pretty good. >> travel the entire world constantly. >> we are just a day away from the president's budget proposal. can the white house find a balance between what republicans and democrats want? the comeback america anywheinit. this will include cuts to entitlements. it's a far cryment do you think there is something here that actually can get past? >> it's a step in the right direction. it's the latest budget in modern history, but it may have been worth the wait. we have the logs on the far right and far left upset. elements of this budget that both the wings don't like.

it's going to add things on the table, take some things off. the real question, where do we go from here? what has to happen, we need to take a page out of president clinton's book based on my experience, they're way ahead of the politicians. that's the path to a grand bargain. >> did you get out there and meet with people in the town hall. it raised awareness. it isn't something that washington has necessarily grabbed in terms of grabbing the bull by the horns. >> we have a republic. it's dominated by career politicians. the far right and the far left are overrepresented in congress. and therefore we need to have a mechanism that will tap what the american people think. most of the american people on center are fiscal conservative but social moderates. they're willing to put everything on the table. they understand you can't spend

a lot more than you take in, charge it to the credit card and not have a day of reckoning. 92% agreement on six principals for reform. 85% agreement, and this is representative group of voters, more spending reductions than revenues 2-3-1. and minimum 77% to 90% agreement on specific social security tax and other reforms. >> but david, you can't blame everything on the politicians. the public is to blame as well. if you take medicare a and b and combine the deductibles for those that is something that is enigma. it happened in 1988. 1999 it was immediately repealed. are senior citizens that different than 1989. >> the polls that most of us read about are absolutely

worthless. >> right. >> what they do is ask people, do you have to work longer before you're eligible for benefits? do you want to pay higher taxes in. >> loaded questions. >> they haven't painted the burning platform. when people understand that we're living on borrowed time. our the future domestic tranquility is threatened if we don't make changes. that takes presidential leadership, meaningful engagement with representative groups of citizens, not just people who support you or the wing nuts on the far right, far left. that is the way to a deal. that is what i hope president obama will embrace. >> do you think it will? as soon as the budget started to get leaked, there was screaming on both sides. do you think that this budget will effectively be approved as is or close? absolutely not. >> this budget is dead on

arrival. the house has already passed their budget. senate already passed their budget. this is intended to try to help bridge the gap. they won't reconcile their budgets. what this could be as a restart of grand bargain negotiations. but to get to a result you have to engage the american people. so far the president has not been able to do that in a way that is principals and values based, that brings people together rather than dividing people apart. that's how you get a deal. let's see if he's willing to do it. >> we're going to cross our fingers on this. david, thank you. always appreciate talking to you. >> i guess you have to go. you're never cynical, david. there's a piece in the -- even in the "new york times", republicans are never going to go for it. he can get more back with pelosi

as speaker. this is a way of putting them in an obstructionist box. unemployment is not coming down because of the sequester. then we will hear he offered a budget deal also not taken. you don't think this is more politicking or you're always hopeful? >> look, i'm an american. >> what do you really think? >> here's the bottom line. >> if they think they're taking the house they're on an illegal substance. he needs to get it done before 2014. people will focus on the 2016 election after the midterms. i know know whether or not he's serious as to whether or not he takes concrete steps to make these type of representative public engagement for upls happen. if he does that, i'll know he's

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welcome back to "squawk box". let's look at stocks to watch in today's trading. alcoa a profit of 11 cents a share, 3 cents above estimates. revenue a little shy of consensus as aluminum prices remain low. there's someone uncertain outlook. monster beverage announced a new $200 million toc bstock buyback. >> that's the bad stuff in red meat and protein drinks. i don't know if it is in this

drink. it was last night on "nightly". >> i have my drug i'm addicted to, coffee. >> i don't think i have a drink jolt. >> st. jude medical downgraded. survey of medical practitioner bigger than expected loss of market share in the next few years. one of the main products are implantable defibrillatordefibr. and prison operators conversion to an investment trust. >> do you like private prisons? is that something you support? >> you were thinking of "walking dead". >> i was thinking of a letter sent by a lot of celebrities and rappers to the president about we have to do something about reforming the whole drug war.

a lot of people that support you are all related to the drug war. >> there is intervention rehab. prohibition. >> the reason people get stuck in prisons instead of mental hospitals where they should be. >> drugs are one of the things that works well. it has to be on the table too. >> coming up, masters week on sidewalk box. the new member of the elite "squawk box" market masters club. we'll talk investing in the tech sector. at tyco integrated security, we consider ourselves business optimizers. how? by building custom security solutions that integrate video, access control, fire and intrusion protection.

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just introduce me to this music every morning. welcome back. we're continuing "squawk" masters week by inducting a new master of the market. the newest member focuses on tech investment. we've had him on before. kevin landis of firsthand

technology fund and chief investment officer. he joins us from new york. we have had good days. but i think of the old days that you were around for. even back in the early 80s. then you had the internet boom. a lot of stocks are still not back where they were at that point. what is new tech? what is the place where we can get doubles, triples, home runs? is it social media? what is it? >> i think there's always new waves of innovation coming. those companies stay private so much longer. you don't really see it when you keep your market blinders on. so instead we look at just the public stocks. we end up talking about newer versions of kodak, polaroid.

>> basically if you're watching the the public markets you get tired of nokia, hp and dell, don't you? >> what about hp. did you see the servers yesterday? is that going to do it? >> we're moving away from our desktop computers. you're exercises data center someplace. cloud computing is the right place to look. i don't know if that's enough for hp. >> how about the private markets? one of the big dangers, people got excited with facebook. we're getting in. nobody hosni financial information. they're just guessing. it's based on press reports. it's stupid investing.

>> sure. both are working on adding transparency to this market so people can buy shares while still private. you're right. absolutely. information is key to this. as i pointed out many times before like any investment you can pay too much. like any investment you can follow the crowd and buy what everybody else is trying to buy. nothing will save you from the human nature that trips people up. that's your capitalists that have shown you can overcome this. they have invested for a long time. they do a lot of homework and insist on good transparency. >> what are your top five positions? >> well, so on the private side we invested in the ipo. we paid 31.50 or something like that. eventually we will make a profit on that one.

on the public side, if you look at the smartphone, only three big companies that are jostling each other or maybe more than jostle elling, samsung, apple, google. >> so you buy all three? >> yes. the crazy guy is giving me a chance to buy it cheap. >> what would you do with blackberry? >> that's such a great straight line. >> i think we understand what you're saying. the crackberry think if you write a nasty twitter you're going to carry. you get to a point of desperation. they don't even know they're signaling what's going on with the company. they remind me of the iomegans or all these guys in the past that hang on.

>> right, right. as soon as you saw apps on your iphone and you realized to get people writing the next generation of phones so people can get more for it. that was everything. rem didn't get enough people writing apps early and the rest is history. >> kevin landis. once you're in, this is also like a roach motel. >> welcome to the roach motel? >> once you're in the masters of the market i don't think anyone has done anything and we've had rubini. we've had people that have never been right again. >> way to sell it. you are in and nothing you can do will get you out. >> i've seen the topping indicators 12 years ago, so i'm well aware of the curse.

>> we're glad you're in. thanks, kevin. >> when we come back we'll head to the new york stock exchange and see what jim cramer thinks about the future of jc penney after the departure yesterday. stick around. we'll be right back. hey, this is challenger. i'll be waiting for you in stall 5. it confirms your reservation and the location your car is in, the moment you land. it's just another way you'll be traveling at the speed of hertz.

welcome back, everybody. let's get down to the new york stock exchange. jim, i saw your tweets about jc penney. you think this might be too big of a job for anybody? >> i think you get the entire at and you are down 30% comes and when you're completely changing horses midstream and you don't know the character you're trying to be. it doesn't matter. i think this task may just be too mighty. >> you've been talking about it for a while while you still had mr. johnson. of course, it was ticking. i wasn't that big a fan of johnson's. that's why that wall of shame exists. it's troubling, becky, because a lot of people work there. there's a lot of dispute about whether mike goldman coming back whether that's good or bad, but remember, this is a company that needs to be able to calm the creditors. and david, isn't everything now and christmas, it's about having those credit lines?

it's a very important component of being a retailer, no doubt about it and confidence erodes then you have real problems and just tries to stabilize. stabilize. stabilize. >> i know howard schultz, adamant, and mike on the board of starbucks. it's the right call. the turmoil has to stop. the people commuting to plano has to stop. they need to be able to rally the troops and it's late. >> i know. >> that is so cute. the ceo can't commute on a plane. i mean, come on. last time i was on you made a great call on apple and i said it's getting low 500s and it's getting cheap, jim. you have to look at the shareholder base. you have been dead right $420. when does it get cheap enough that you say fine. we'll get all of the value guys piling into it. >> i think it's when the ceo recognizes while there's been a 6,000% improvement over time it's on him to make people feel

better about the stock. the silence has been deafening and it's been very, very difficult. i'm not going to miss the opportunity to say congratulations for jeff bezos. you're a beacon to the industry. >> very kind. thank you. >> don't you think faber just sounds cooler? is it too late for you to just -- >> and a ponytail. >> i can adopt some sort of -- >> davis faber. he changed his first name to faber. >> i can become a james bond. >> if we'll reinvent ourselves. people would hang on every word, more than they do. >> joe fresh. >> do the reinvention program and i'm all in. you just tell me what i need to do. >> thanks, guys. we've heard from famed businessman richard branson and jim bullard and we have henry

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